State RegulationsMA specificDifficulty 1/5
A Massachusetts resident holds an individual deferred annuity contract, and the issuing insurer becomes insolvent. What is the maximum present value the Massachusetts Life and Health Insurance Guaranty Association covers for that annuity, including cash surrender and withdrawal values?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
M.G.L. c. 175, § 146B(3)(b)(iii) sets the guaranty association's coverage for annuity contracts at a present value of $250,000, and that figure includes the contract's cash surrender and withdrawal values. Annuitants therefore cannot assume their full account value is protected once an insurer fails. The Massachusetts Life and Health Insurance Guaranty Association publishes this limit in its official consumer FAQ, and producers must keep it distinct from the caps that apply to life and health benefits.
Why the other options are wrong
- A) $100,000 is the cap for certain health benefits and for cash surrender values within the life benefit under M.G.L. c. 175, § 146B, not the annuity cap.
- C) $300,000 is the cap for life death benefits, disability income, long-term care, and the per-life aggregate under M.G.L. c. 175, § 146B, not for annuities.
- D) $500,000 is the cap for basic hospital, basic medical-surgical, and major medical benefits under M.G.L. c. 175, § 146B, not for annuities.
Memory hook
Annuities get a quarter-million: $250,000 present value is the annuity ceiling.